A multi-regional model of electric resource adequacy

Crampes, Claude and Salant, David (2018) A multi-regional model of electric resource adequacy. TSE Working Paper, n. 18-877, Toulouse

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Official URL: http://tse-fr.eu/pub/32308

Abstract

The paper analyzes the determinants of optimal electric capacity and contrasts these with the requirements typically applied in a multi-regional model. We first analyze the relationship between usual reliability criteria such as the value of lost load and the targeted probability of failure, on the one hand, and the conditions that define optimal level of capacity on the other. Secondly, we characterize the social gains from energy trading between two interconnected regions that differ in terms of technologies or demand. Market mechanisms are sufficient to reach the first best allocation, irrespective of the correlation between national demand levels, provided that firms have no market power and fully internalize the value of lost load due to power rationing when supplies are inadequate. Thirdly, we explain the impact of various compensation mechanisms such as capacity payments when producers face a regulatory capacity constraint.

Item Type: Monograph (Working Paper)
Language: English
Date: January 2018
Place of Publication: Toulouse
Uncontrolled Keywords: Capacity adequacy, Electricity trade, Capacity adequacy, Capacity credits, Cooperation, Value of loss load
JEL codes: D44 - Auctions
F10 - General
H57 - Procurement
L51 - Economics of Regulation
L94 - Electric Utilities
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 24 Apr 2018 09:03
Last Modified: 24 Jul 2018 12:28
OAI ID: oai:tse-fr.eu:32308
URI: http://publications.ut-capitole.fr/id/eprint/25801

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